Week Ahead: It's EPS Prime Time

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Includes: DIA, IVV, QQQ, SPY, VOO
by: Markos Kaminis

The week ahead is "prime time" for earnings season, with major American companies and sensational stocks due to put up or shut up. As these companies report their results for the latest quarter, they will either offer their shareholders vindication for hanging in there or a feeling of betrayal. Among the most notable reporters on the week with something to prove, Apple (NASDAQ:AAPL), Facebook (NASDAQ:FB), Caterpillar (NYSE:CAT), Boeing (NYSE:BA), Zynga (NASDAQ:ZNGA) and Amazon.com (NASDAQ:AMZN) among others. Earnings season has allowed stocks to break away from macro-drivers and show off alpha if they got it. This week will certainly continue that trend, with the economic data that is due on the soft side.

Index ETF

Week Ending July 19

Year-to-Date

SPDR S&P 500 (NYSEARCA:SPY)

+1.0%

+18.8%

SPDR Dow Jones (NYSEARCA:DIA)

+0.7%

+18.8%

PowerShares QQQ (NASDAQ:QQQ)

-0.9%

+14.7%

Click to enlarge

A disappointing week for the NASDAQ was highlighted by disappointments at Google (NASDAQ:GOOG), Intuitive Surgical (NASDAQ:ISRG) and Microsoft (NASDAQ:MSFT). It caused the PowerShares QQQ to diverge from the modest increases posted by the SPDR S&P 500 and the SPDR Dow Jones Industrial Average. Bad news was not limited to the NASDAQ though, with a notable disappointment at Coca-Cola (NYSE:KO) causing some concern about this week's report by PepsiCo (NYSE:PEP). The greatly anticipated report from Apple will likewise dominate and drive the NASDAQ this week; though the direction remains unknown today, it seems the company's EPS result could be soft but there remains the possibility of a new product announcement like for instance a watch of some sort.

Economic Events

THIS WEEK'S ECONOMIC REPORT SCHEDULE

Economic Data Point

Prior

Expected

MONDAY

Chicago Fed National Activity Index

-0.3

+0.03

Existing Home Sales

5.18 M

5.27 M

TUESDAY

FHFA House Price Index

+0.7%

+0.8%

Richmond Fed Manufacturing Index

8

8

ICSC Store Sales

-1.1%

NA

Senate Examines Sequestration

WEDNESDAY

PMI Manufacturing Index (Flash)

52.2

52.8

New Home Sales

476K

481K

Mortgage Activity

-2.6%

NA

EIA Petroleum Status - Crude Oil Inv.

-6.9 M

NA

THURSDAY

Durable Goods Orders

+3.6%

+1.5%

-Orders Ex-Transportation

+0.7%

+0.6%

Kansas City Fed Manufacturing Index

-5

0

Bloomberg Consumer Comfort

-28.4

NA

Weekly Jobless Claims

334K

341K

EIA Natural Gas Report

+58 Bcf

NA

SEC Examines Dodd-Frank

FRIDAY

Reuters/Michigan Consumer Sentiment

83.9

84.0

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It was amazing that the individual stock news outweighed the very high profile testimony of Federal Reserve Chairman Bernanke last week. This week's economic schedule will be much more subdued, giving the floor to the corporates even more.

Still, the week offers several key housing data points that could confirm the bad news reported last week in Housing Starts. The Existing Home Sales Report especially carries weight this week, though not much change is expected by economists. Still, the existing home market is much more important than the new home market, which often gets more attention. New Home Sales are seen increasing modestly, but the economic data point will be overshadowed by the individual reports of the homebuilders this week, with major names including industry leader PulteGroup (NYSE:PHM) due to report. Speaking of putting up or shutting up, the valuations in this group have received their first true test of the recovery lately due to concern about the impact of rising mortgage rates on activity.

Several key manufacturing measures are set for release as well this week, including the PMI Manufacturing measure and Durable Goods Orders. We will also hear from major reporting regions, with data due from Federal Reserve Banks of Richmond and Kansas City. So the market will have plenty of significant data from important sectors of the economy to weight.

The Chicago National Activity Index for June could confirm the bad news received last week from the Leading Economic Indicators Index, which was unchanged in the last month of the second quarter. With economists across Wall Street lately cutting their GDP forecasts for the quarter, every June measure will either confirm that caution or rebuke it, and the investment community will be paying attention.

Corporate Events

HIGHLIGHTED EPS REPORTS

Company

Ticker

MONDAY

McDonald's

NYSE: MCD

Halliburton

NYSE: HAL

Federal-Mogul

Nasdaq: FDML

Gannett

NYSE: GCI

Texas Instruments

NYSE: TXN

PetMed Express

Nasdaq: PETS

Hasbro

NYSE: HAS

Volterra Semiconductor

Nasdaq: VLTR

Carmike Cinemas

Nasdaq: CKEC

Six Flags Entertainment

NYSE: SIX

TUESDAY

Apple

Nasdaq: AAPL

AT&T

NYSE: T

UPS

NYSE: UPS

United Technologies

NYSE: UTX

Travelers

NYSE: TRV

Valero Energy

NYSE: VLO

Electronic Arts

NYSE: EA

Norfolk Southern

NYSE: NSC

VMWare

NYSE: VMW

Broadcom

Nasdaq: BRCM

WEDNESDAY

WellPoint

NYSE: WLP

PepsiCo

NYSE: PEP

Ford Motor

NYSE: F

Boeing

NYSE: BA

Caterpillar

NYSE: CAT

Radian Group

NYSE: RDN

EMC

NYSE: EMC

Northrop Grumman

NYSE: NOC

Realogy

Nasdaq: RLGY

Facebook

NYSE: FB

THURSDAY

Under Armour

NYSE: UA

Sirius XM Radio

Nasdaq: SIRI

Biogen Idec

Nasdaq: BIIB

Harley-Davidson

NYSE: HOG

General Motors

NYSE: GM

Zynga

Nasdaq: ZNGA

Starbucks

Nasdaq: SBUX

Amazon.com

Nasdaq: AMZN

Cliff's Natural Resources

NYSE: CLF

Gilead Sciences

Nasdaq: GILD

FRIDAY

Choice Hotels

NYSE: CHH

Weyerhaeuser

NYSE: WY

KKR

NYSE: KKR

Newell Rubbermaid

NYSE: NWL

Helmerich & Payne

NYSE: HP

Dresser-Rand

NYSE: DRC

DTE Energy

NYSE: DTE

Donegal Group

Nasdaq: DGICA

Provident Financial

NYSE: PFS

Ventas

NYSE: VTR

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Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.